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Compare The Cost Of The Following Leasing Agreement With The Finance Charge On A Loan For The Same Time Period

Question

Compare the cost of the following leasing agreement with the finance charge on a loan for the same time period.

The price of the car is $14,000, and its projected residual value at the end of four years is $3,000.

Monthly payment$250

Capital cost reduction $1,000

Disposition charge $200

Other things being equal, one would want to finance this car rather than take this lease if the finance cost were less than

2,200

2,450

200

1,550

Finance